英国国家经济和社会研究所-月度工资跟踪器：英国第一季度工资预计增长5.4%（英）

NIESRMonthlyWageTracker

UKWagesExpectedtoGrowby5.4PerCentinQ1

PaulaBejaranoCarboandMonicaGeorgeMichail

12March2024

"Today’sONSfiguresindicatethattheannualgrowthrateinaverageweeklyearnings,includingbonuses,was5.6percentinthethreemonthstoJanuary,and6.1percentexcludingbonuses.Whilethesefiguresremainhighbyhistoricalstandards,allowinghouseholdstoregainsomeofthepurchasingpowerlostduringthepost-Covidperiodofhighinflation,wagegrowthcontinuestosoften.Weexpectwagegrowthreturningtohistoricallevelsasthelabourmarketcontinuestoloosen,potentiallypromptingtheBankofEnglandtoconsidercuttinginterestratesinthenearfuture."

PaulaBejaranoCarbo

Economist,NIESR

-2-

MonthlyWageTracker

March24

niesr.ac.uk

NationalInstituteofEconomicandSocialResearch

Figure1-Averageweeklyearningsinpublicandprivatesectors

MainPoints

•Paygrowthsoftens,butremainsstrongbyhistoricalstandards:Theannualgrowthrateofaverageweeklyearnings,includingbonuses,was5.6percentinthethreemonthstoJanuary2024whilepaygrowthexcludingbonuseswas6.1percent.Thesefiguresindicatethatwagegrowthcontinuedtosoftenatthestartof2024,afterpeakinginmid-2023(Figure1).

•Weforecastwagegrowthtocontinueslowingasthelabourmarketcontinuestocool:Withvacanciesfallingsteadilysincemid-2022,thevacancy-to-unemploymentratiowas0.7inthethreemonthstoJanuary.Ifthistrendcontinuesandthelabourmarketloosensfurther,wagegrowthislikelytoslowdowntoitshistoricallevelsinthemedium-term.Weforecasteconomy-widetotalpay(incl.bonuses)andregularpaytogrowby5.4and5.7percentinthefirstquarterof2024,respectively.

•Despitepaygrowthsoftening,workerswillcontinuetoenjoysomerealincomegains:Thoughweexpectwagegrowthtosoftenoverthecourseof2024,thesepaygrowthprojectionsarehighbyhistoricalstandards–remainingabovetheeconomy-widetotalandregularpaygrowthpost-2001averagesof3.3and3.2percent.Givenrecenttrendsinprices,wecanexpectworkerstocontinuemakingrealincomegainsinthecomingmonths,whichcanbeinterpretedasa‘wagecatch-up’periodfollowingoverayearofrealincomelosses.

-3-

MonthlyWageTracker

March24

Vacanciesandemployment

Today’sreleasesuggeststhattheemploymentratefellslightlyonthequarterto75.0percent,theunemploymentratewaslargelyunchangedonthequarterat4.0percent,andtheinactivityrateincreasedmarginallyonthequarterto21.8percent.

Agoodmeasureoflabourmarkettightnessisthevacancy-to-unemploymentratio.Figure2plotsthevacancy-to-unemploymentratio,whichstoodat0.68inthethreemonthstoJanuary,comparedtoanaverageof0.52in2015-2019andahistoricalaverageof0.42.Decreasingvacancieshavedrivenanoverallgraduallooseningofthelabourmarketsince2022.Infact,thenumberofjobvacanciesfellby43,000onthequarterinthethreemonthstoFebruary2024,representinga4.5percentdecreaseandmarkingthe20thconsecutiveperiodinwhichvacancynumbershavefallen.Figure2illustratesthatthevacancy-to-unemploymentratiohasremainedstableinrecentmonths,withasmallreductioninthethreemonthstoJanuary,andaftersteadilyfallingfromthehistoricallyhighlevelsrecordedin2022.Thatsaid,inourrecent

UKEconomic

Outlook,

weforecasttheunemploymentratetoriseslowlyinthemediumterm.Ifthistrendofagraduallooseningofthelabourmarketcontinuesasresultoffallingvacanciesand/orincreasedunemployment,wecanexpectwagegrowthtoreturntohistoricallevelsinafewyears’time.

Figure2-Vacancy-to-unemploymentratio

-4-

MonthlyWageTracker

March24

Thelatest

KPMGandRECreportonJobs

notesthattherateofsalaryinflationforpermanentplacementseasedtoathree-yearlowinFebruary,asemployerbudgetshavetightenedfollowingmonthsofhighnominalwagegrowthandthelabourmarketcontinuestoloosen.Onthelatterpoint,therateofcontractionindemandforstaffwasthequickestrecordedsince2021–withpermanentvacanciesfallingforyetanothermonth,andtemporaryvacanciesfallingforthefirsttimeinoverthreeyears.Withhiringbeingsubduedbyhigheconomicuncertaintyandweakdemandprospects,wecantakethesehigherfrequencydataasfurthersignsthatthelabourmarketwillcontinuetolooseninthecomingmonths.

Pay

Theannualgrowthrateofaverageweeklyearnings,includingbonuses,was5.6percentinthethreemonthstoJanuary2024whilepaygrowthexcludingbonuseswas6.1percent.Thesefiguresindicatethatwagegrowthcontinuedtosoftenatthestartof2024,afterpeakinginmid-2023(Figure1).

Whenweadjustforinflation,annualrealeconomy-widetotalpaygrowthfallsfrom5.6percentto1.3percentinthethreemonthstoJanuary,indicatingtheextenttowhichinflationcontinuestoerodeworkers’realincomes.Annualrealtotalpayintheprivateandpublicsectorsgrewby1.2and1.6percentinthreemonthstoJanuary,respectively(Figure3).

Figure3-Realaverageweeklyearningsinpublicandprivatesectors

-5-

MonthlyWageTracker

March24

Private-sectorannualregularpaygrowthwas6.1percentinthethreemonthstoJanuaryand5.7percentifweincludebonuses.Ourforecastforthefirstquarterof2024seesthesefiguressofteningto5.7percentand5.3percent,respectively.Thoughweexpectwagegrowthtosoftenoverthecourseof2024,thesegrowthprojectionsarehighbyhistoricalstandards-remainingabovetheprivatesectorregularandtotalpaygrowthpost-2001averagesof3.2percentand3.3percent.Givenrecenttrendsinprices,wecanexpectprivatesectorworkerstocontinuemakingrealincomegainsinthecomingmonths,whichcanbeinterpretedasa‘wagecatch-up’periodfollowingoverayearofrealincomelosses.

Public-sectorannualtotalAWEgrowthwas5.8percentinthethreemonthstoJanuary.ThisfigurehasfallensubstantiallyfromtheserieshighrecordedinAugustof12.5percentwhichwaslargelydrivenbyone-offNHSandcivil-servicebonuspayments.Weforecastpublicsectortotalpaytogrowby5.8percentinthefirstquarterof2024,wellaboveitspost-2001averageof3.2percent.

Figure4-Totalaverageweeklyearningsintheservicessector

ServicessectortotalAWEannualgrowthhasbeenonanincreasingpathsincetheinitialpandemic-relatedplummet,andcurrentlystandsat5.8percentinthethreemonthstoJanuary.AsFigure4aboveshows,thereseemstohavebeenashiftinservicessectortotalAWEgrowthpre-andpost-pandemic;theaveragegrowthrateinAWEinthissectorwas3percentfromJanuary2001toFebruary2020,whilefromMarch2020onwardsthisaveragehasincreasedto5.6percent(evenaccountingfortheinitialcovid-relatedplummet).Sincepayintheservicessectormakesupmostoftheinputcostsinthissector,itisthemaindriverofservicesinflation.Aswehavebeennotinginourrecent

CPItrackers,

withenergypriceinflation‘droppingout’oftheCPIbasketinrecentmonths,foodandcoreinflationarethemainfactorskeepingCPIinflationelevated.

-6-

MonthlyWageTracker

March24

Whileitispositivethatwagegrowthintheservicessectorhasbeenonasteadydownwardstrendsincemid-2022,itremainswellaboveitspre-pandemicaverage(Figure4).Continuinghighwagegrowthintheservicessectoralongsidethelabourmarketremainingsomewhattightbyhistoricalstandardsmayconcernmonetarypolicymakers,whomaytakethisasasignthatservicesinflationwillcontinuetogeneratepersistenceinunderlyinginflationintheUnitedKingdom,despitemonetarytighteningefforts.Indeed,asnotedin

Haskeletal.’s(2023)

recentmodelofthewage-pricedeterminantsofinflationintheUnitedKingdom,increasedlabourmarkettightnessanditseffectonelevatedwageinflationbecameincreasinglyimportantcomponentsofCPIinflationthroughout2023.

Caveat

NIESR’sWageTrackerincludespredictionsforregularpayandbonuspaymentsforthewholeeconomy,aswellasforecastsforprivateandpublic-sectorwages.TheWageTrackerexploitsinformationfromkeymacroeconomicindicators,includinglabourmarkettrends,buildingalsooninformationfrommonthlyGDPnowcastsproducedbyNIESR’sGDPTrackerandsurveyevidence,suchaslabourcostsinthemanufacturingandservicesectorsfromtheBankofEnglandAgentsScores.Thewagemodelsalsocapturetheinteractionbetweenprivateandpublicpay,showntoberelevantinworkdonebyNIESR.

Tocheckhowourmethodologywouldworkinrealtimewehaveproducedjudgement-freeforecastsofearningsgrowthfortheperiodbetweenJuly2010andOctober2018.Forwholeeconomyearnings,therootmeansquareerroris0.2percentagepointsforthemeasureexcludingbonusesand0.4percentagepointsforthemeasureincludingbonuses.Thesenumbersindicatethedegreeofuncertaintyaroundthepointforecastsproducedbythemodelsateachpointintime.Theerrorsaregreaterforthemeasureofearningsincludingbonusesbecausebonuspayments,particularlyintheprivatesector,aresubjecttoshort-termvolatility.Inpractice,weaddresidualsreflectingourjudgementsotheactualerrorbandsmaybelargerorsmaller.

Notesforeditors:

ForfurtherinformationpleasecontacttheNIESRPressOffice:

press@niesr.ac.uk

orLucaPierion02039484488/

l.pieri@niesr.ac.uk

NationalInstituteofEconomicandSocialResearch

2DeanTrenchStreet

SmithSquare

London,SW1P3HE

UnitedKingdom

SwitchboardTelephoneNumber:02072227665

Website:

http://www.niesr.ac.uk

-7-

MonthlyWageTracker

March24

Table1:Summarytableofearningsgrowth

AverageWeeklyEarnings

Wholeeconomy

Privatesector

Publicsector

Latestweights

100

82

18

RegularTotal

RegularTotal

RegularTotal

Dec-22

589633

585638

614615

Jan-23

593637

587640

619622

Feb-23

597640

592645

620621

Mar-23

600644

595648

621623

Apr-23

605651

601655

624625

May-23

611655

607658

626626

Jun-23

614670

610663

629711

Jul-23

617665

612667

633656

Aug-23

620664

615669

634641

Sep-23

622673

617674

642645

Oct-23

619664

614670

643646

Nov-23

624666

619671

647649

Dec-23

626670

621674

651653

Jan-24

627672

621676

655656

Feb-24

631674

625678

656